With cheap LNG available practically anywhere with access to the sea, and a receiving LNG terminal, electric utilities can switch to cost-effective gas power generation even in the absence of pipeline infrastructure.
Calculating a pilot LNG-to-Power project that could support decentralized areas of the Philippines grid, MAN assumes an indicative price for EPC (engineering, procurement and construction) of 750 Euros per kW plus maintenance cost of 4.5 Euros per MWh under natural gas operation. The power plant is scalable – from 20 MW to 220 MW – dependent on how many engines of the type 18V51/60DF are being used.
Finance linked to fuel supply
Project finance for small-scale LNG-to-Power projects is often linked to a fuel supply concept. Hereby, the LNG supplier steps in and supports with the LNG infrastructure, which is refinanced by higher supply costs.
“It’s a bit like the Nespresso principle,” MAN Energy Solution’s business development manager Carsten Dommermuth told Gas to Power Journal.
“For the reference scenarios we expect the small-scale LNG-to Power project to be situated in a remote location, reachable with an LNG carrier with a transport capacity of about 30,000 cubic meters (cbm). Best case would be to use existing power plant sites with related infrastructure and already available site with access to the high voltage grid,” he explained.
The LNG is assumed to arrive at a central terminal on the island, situated not more than 25 km from the power plant site. From the import terminal, the LNG can either be transported by truck to the power station or be regasified at the terminal and supplied via a natural gas feeder pipeline.
The actual power plant is assumed to be operated in baseload mode with 8,000 hours per year. Scalable between 20 MW and 220 MW, the power plant will be driven by dual fuel engines type 51/60 DF in single-cycle installation.
Modeling future plant economics
For prospective customers, MAN can deliver an LNG logistics and power plant concept; a technical proposal for the LNG infrastructure [which would be realized with a subcontractor]. Non-binding calculations are also being made for CAPEX and OPEX for the small-scale LNG-to-power solution, and based on modeling of future electricity tariffs these calculations give a first indication of the project’s financial profitability.
Asked about the customer types, he specified that on IPP markets there is quite some private equity involvement, with players looking for an attractive PPA which has to cover the investment and debt re-payment. On the other side of the spectrum, there are state-owned utilities on non-liberalized markets which cater for the nation’s fuel supply for power generating.
In principle, MAN Energy Solutions can deliver all necessary parts to set up the project. “The LNG import terminal with Jetty´s can be provided by MAN together with an EPC partner. Regasification solution, storage solution and a power plant can be provided by us,” Mr. Dommermuth said.
“The LNG obviously is to be provided by a global gas supplier, e.g. Shell, Gazprom or BP,” he added, concluding: “Accordingly we can cater the full value chain, and only may need third party support to set up a jetty dependent on specifications of the coastal strip.”